As almost everyone knows -- certainly everyone in Washington and on Wall Street -- the ongoing government shutdown is merely the amuse-bouche to a truly terrifying main course: the breaching of the federal debt limit and therefore a default on the government's debt. The current prediction of D-day is Oct. 17.
If the House refuses to raise the limit, as it appears ready to do, President Obama should just ignore it. That advice is being increasingly heard in the policy community, and it's the right course.
The debt limit standoff has become almost an annual affair, as House Republicans try to extract huge concessions from Obama in return for raising the limit; in 2011 this yielded the sequester, a truly self-destructive roster of spending cuts, still in effect.
Obama says he'll no longer negotiate over the debt limit, and he's right to take that stand. As I've observed before, it should be abolished. It's an antiquated rule, originally imposed to facilitate, not hamper, the issuance of government debt. In the hands of the spoiled children of the House of Representatives, it places the entire international financial system at risk.
But what can Obama do if the House refuses to raise the ceiling? One especially rococo suggestion is that the U.S. Treasury mint a trillion-dollar platinum coin, walk it over to the Federal Reserve, and use it to back continued issuance of government debt.
Technically, that seems to be legal, but it reflects desperation and impatience on the part of its proponents rather than judicious policy-making. ("Mint the damned coins already," counsels Berkeley economist Brad DeLong.)
But almost certainly Obama doesn't have to go that far. That's the opinion of law and taxation experts Neil H. Buchanan and Michael C. Dorf, whose magisterial 2012 analysis in the Columbia Law Review established that in the absence of a debt-limit increase, Obama would have three realistic options, all of them unconstitutional. His duty under such a "trilemma," as they called it, would be to choose the least unconstitutional option. They argue that ignoring the limit is that option.
Their reasoning is straightforward. Allowing a default would violate the 14th Amendment, which states that "the validity of the public debt ... shall not be questioned." But borrowing in excess of the debt limit enacted by Congress would violate the constitutional separation of powers. And simply printing additional dollars would violate Congress' constitutional authority to coin money and regulate its value (platinum coins being the one exception).
Given the choices, breaching the debt limit is the "least bad" option, Buchanan and Dorf say. They point out that no one actually takes the debt limit seriously as a fiscal device.
"In practice," they write, "Congress has treated the debt ceiling as a symbolic measure or, at most, a bargaining chip of relatively little value; prior to 2011, everyone understood that the debt ceiling would ultimately be raised." It can't be reconciled with Congress' regularly passing tax and spending laws that require more borrowing.
And if Congress really wanted the limit to mandate fiscal prudence, the lawmakers would specify what the president must do in the event of an impending breach, say, by instructing him to impound appropriated funds that would force a breach. Congress never does that.
Put it all together, and the only conclusion is that breaching the debt limit is the choice Congress really wants Obama to make. Let him grant its wish.